Dubai has been rated as the most 'affordable' city to purchase a home in, as compared to other major international hubs across the globe, according to Savills World Research.
The conclusion is based on a comparison of the emirate with London, New York, Hong Kong, Paris, Mumbai, Singapore and Sydney.
But, it is far more expensive to rent a property in Dubai than the above countries, with gross rental yields close to nine per cent.
In its Dubai Residential Market report for the first quarter, 2016, Core, the UAE associate of Savills, however, states that prices and rentals are expected to soften further over the next 12 months.
Villa rental rates fell by between 2 per cent and 8 per cent in 2015, while prime apartment districts, such as Dubai International Financial Centre and Jumeirah Beach Residence, experienced the highest rental falls of about four per cent.
Core CEO David Godchaux believes that the decline in prices at a quicker rate in comparison to rents has resulted in increasing yields and expects this to continue for the best part of 2016, making it more interesting for renters to consider ownership and for investors to re-enter the market at lower prices and higher yield levels.
A number of developers are launching projects targeting mid-income UAE residents with salaries of Dh15,000 to Dh25,000 a month.
Besides, some banks are now offering low fixed interest rates, ensuring the monthly installments continue to remain same over a number of years.
Core, however, states the downward pressure continues on the residential market as a result of the falling oil prices, a generous supply pipeline, the strengthening dirham against a range of traditional investor economies and the uncertainty in the region.
He adds: “This has very much been a self-fulfilling prophecy until now where most investors believe the market should see another six months of price declines, which in itself has translated and still translates into more downward pressure.
“Reversely, we are now witnessing a growing pool forming of investors and renters who are anticipating a balance in price and increase by the end of 2016, which is a strong stabilising factor, as many have shown they are ready to transact now if they believe that the price is right.”
The report emphasises that in the mid-term and until 2020 other key drivers such as Dubai’s perception as a regional 'safe haven', the ability to obtain a visa, the variety of investment options and the pleasures of a second home in a warm, sunny climate with improving infrastructure will continue to ensure it remains an attractive proposition for residential investment for a wide range of regional and global investors.
In 2015, nearly 8,000 residential units were delivered in comparison to the 25,000 units projected for completion.
The consultancy estimates between 9,000 and 10,000 units to be delivered this year.